Standing Committee A

[Mr. Derek Conway in the Chair]

Local Government Bill

Clause 53 - Power of veto

Amendment moved [this day]: No. 153, in 
clause 53, page 22, line 8, leave out from 'proposals' to end of line 9.—[Mr. Clifton-Brown.]

Derek Conway: I remind the Committee that with this we are considering the following:
 Amendment No. 76, in 
clause 53, page 22, line 9, at end insert— 
 '(2A) In deciding whether to exercise the veto a billing authority must have regard to— 
 (a) the identification of the classes of owners of superior property interests proposed to be charged, 
 (b) any classes of owners of superior property interests who are not proposed to be charged, 
 (c) the allocated proportion proposed to be charged to each owner of a superior property interest, and 
 (d) the proposed arrangements for the management of the BID including the representation of owners of superior property interests in the management arrangements 
 and shall exercise the veto unless it is satisfied that the proposed BID arrangements are fair and equitable in relation to the manner in which the projects specified will be financed and shall have regard to any Codes of Practice issued by the Secretary of State.'.
 Amendment No. 77, in 
clause 53, page 22, line 11, after 'such', insert 'additional'. 
Amendment No. 152, in 
clause 53, page 22, line 12, after 'notice', insert 'no later than 3 months from the date of the ballot'.

Geoffrey Clifton-Brown: On a point of order, Mr. Conway. I have served on many Committees, under the previous and the current Administrations. I understood that it was a convention of the House that, when a Government document was referred to, it would be sent to hon. Members and it would be available on the Table, so that if, by chance, an hon. Member did not have a copy, as was clear from the discussion this morning, one would be available in the Committee Room. I have no criticism of the Ministers, but if that had been the case this morning, it would have avoided much unnecessary discussion and made for a much better debate. We would have conducted our proceedings in a much more orderly way. I seek your guidance on the matter.

Derek Conway: I hear what the hon. Member says and, indeed, that is good practice. I received the bundle to which he refers in the post, but some members of the Committee may not have done. The method of supplying the papers is not prescribed, but the point that he makes about good practice may be helpful. If the Under-Secretary wishes to comment, that would be useful.

Christopher Leslie: Further to that point of order, Mr. Conway. In the light of the debate that we had earlier, I have asked officials to bring over sufficient copies to be placed on the Table for hon. Members to have to hand throughout the rest of the proceedings. In case there has been a problem in receiving notes on policy intent, I have asked for copies of them, too. I appreciate that we often refer to much documentation in debate, and it is not always possible to have that to hand, but we will certainly try our best to facilitate debate.

Geoffrey Clifton-Brown: As always, the Under-Secretary is courteous. Officials would be completely overwhelmed if they were asked for enough copies for all members of the Committee. Two or three copies will suffice. Having borrowed a copy from the Liberal Democrats this morning, I hereby return it to them. It did not disappear in the bin. I have a spare copy for any other member of the Committee who wants one.
 I want to make progress this afternoon and deal with the BIDs fairly rapidly. The purpose of the group of amendments is to prise out of the Government not only the timetable within which the notice of revocation must be served, but the conditions that they must envisage before using the power of veto. Amendment No. 76 identifies a class of property owners who, in the interests of equity, should be considered before a BID arrangement goes forward. As we know, there can be various layers. There can be a licensee, a tenant, a lessee, a head lessee, and a Crown Lessee on top, so it is not a straightforward matter. Having introduced the amendments as briefly as I can, it will be interesting to hear what the Under-Secretary has to say.

Christopher Leslie: I, too, am hopeful that we can make some swift progress, given the amount of business that we have. Sadly, most of the amendments are different in different ways, so I hope that the Committee will bear with me while I explain why I doubt that we can accept them. We have considered several amendments that would make property owners liable to pay the BID levy, and therefore entitled to vote on a BID proposal. We resisted them. There is no practical way in which property owners can be liable for the BID levy. They can, if they wish, make voluntary contributions.
 The amendments assume that property owners will pay the levy and therefore we will have a vote on the establishment of the BID. Despite property owners having a vote, the amendments propose that the billing authority should be under a statutory duty to veto a BID proposal if the interests of property owners would be compromised in some rather unspecific way. The only reason for the amendments is that those who want property owners to be liable for the BID levy may also want the entire BIDs to be vetoed, if it were felt that the interests of property owners would not be well served by the BID. 
 I see no justification for the suggested approach. Clause 53 provides that a local authority can veto a BID proposal, but it does not include, as the amendment would have it, a statutory bias in favour of a particular interest group such as property owners, 
 and nor should it. The local authority should consider the interests of all those who would be affected by a BID. We are well aware of the interests of property owners and their importance in making a BID proposal work, but they will not be subject to the BID levy. 
 We expect the local authority veto to be applied rarely to protect the interests of other people in the local area who could be adversely affected by changes made as a result of the creation of a BID. The regulations will be set out in accordance with the policy in the White Paper, which states: 
''Councils would have the reserve powers to veto proposals, where they could demonstrate that the proposed BID would conflict with locally adopted plans made under statute, or otherwise formally adopted by the council, such as the community strategy.''
 If the council feels that there are conflicting issues, it will have an opportunity for a veto.

Andrew Turner: Does the Under-Secretary recall my intervention before lunch? Will he explain why a veto can be exercised only after a ballot is held, not before?

Christopher Leslie: We will come shortly to the timing of the veto and whether amendments Nos. 152 and 153 should be accepted. They would remove the power of the Secretary of State to prescribe the circumstances and to impose a time limit on when the veto may be exercised.

David Curry: The Under-Secretary himself said earlier that, when the BID proposals were being put together, they would have to involve the local authority as the billing authority. He specifically said that the proposals could be put together only with the local authority. If that is so, how does the Under-Secretary envisage a circumstance in which the local authority would veto a BID proposal in which it had been involved? Does that mean that it is possible to put together a BID proposal and win a ballot on it despite the hostility of the local authority?

Christopher Leslie: I understand that the guidance suggests that it is best practice to have the local authority on board as a natural key stakeholder in any BID arrangement. However, BID proposals can be put together without the local authority being a key player. To allow authorities to have an important role in overseeing some of the issues that naturally affect their functions, activities and concerns, we should give them an opportunity to have a veto in those unforeseen circumstances in which they may not have been a key player at the inception of the BID proposals and a BID vote subsequently takes place. As I have said, those circumstances will be rare.
 The powers have been put in place not least to ensure that local authorities have a serious voice and are taken seriously by those putting together BID proposals. That will help to ensure that local authorities are fully taken into account when BID arrangements are drawn up. 
 Amendments Nos. 152 and 153, as I have said, would remove the Secretary of State's power to prescribe the circumstances and to impose a time 
 limit on when the veto may be exercised. We see no reason to prescribe a particular period in primary legislation. Clause 53 gives the Secretary of State the power to make regulations regarding the veto. A time limit could be included in regulations, but we see no reason to put one in the Bill. BIDs are a partnership between the local authority and the business community. If a local authority thinks that a BID would conflict with its other plans, it should state that long before a BID ballot takes place. Indeed, we say that in our guidance. 
 We want to learn from the practical experience of those setting up BIDs before we put specific time periods into regulations. The BIDs provisions are designed to allow maximum flexibility, to allow for different circumstances in different areas, and the amendments would go against the spirit of the legislation.

Geoffrey Clifton-Brown: The Minister has read out his brief very quickly, and I introduced the amendments very quickly. I should be grateful if he could give us some examples of the situation in which a local authority would issue a veto, given that it would have been involved in the process in the first place. Having drawn up a business plan and gone through the whole procedure of the ballot, what are the circumstances in which it would exercise that veto? [Interruption.]

Derek Conway: Order. Before the Minister replies, perhaps we could find out who would like to answer their phone.

Christopher Leslie: I do not think that it was my phone, Mr. Conway. I always ensure that I switch it off before the proceedings begin—but I will check later on.

David Curry: It is the Prime Minister thanking the hon. Gentleman for his vote.

Christopher Leslie: It may well be. The right hon. Gentleman has obviously been perusing his reading material in depth.
 I can envisage some circumstances in which the veto might be exercised, but it would be unwise to speculate about those. I said that a council might issue a veto if a BID was seen to be in conflict with a local authority's statutory plans, its community strategy or a key plan that had been agreed by the council and that it wanted to pursue. We will shortly be discussing the appeal mechanisms against the veto, and that will help to balance the issue. 
 I have set out examples of the circumstances in my comments, and on that basis I hope that the amendments will be withdrawn.

Geoffrey Clifton-Brown: The Minister's answer was not wholly convincing. My hon. Friend the Member for Isle of Wight (Mr. Turner) made a valid point. It seems to me that there should be a power for the local authority to exercise a veto before going to all the trouble and expense of a ballot. However, I believe that we have explored the matter as much as we can, and I beg to ask leave to withdraw the amendment.
 Amendment, by leave, withdrawn. 
 Clause 53 ordered to stand part of the Bill.

Clause 54 - Appeal against veto

Question proposed, That the clause stand part of the Bill.

Desmond Swayne: Will the Under-Secretary enlighten the Committee, for the record, as to what matters are provided for under subsection (2)(d)?
 Looking ahead to clause 55(7)(a) and (b), will he also tell us why those paragraphs are placed in clause 55 and not in clause 54? They seem to be more the subject matter of clause 54, which deals with the appeals procedure, than of the commencement arrangements.

Christopher Leslie: The drafting arrangements for provisions on allowing such an appeal and the effect of allowing the appeal placed those provisions under clause 55. However, whether they come under clause 55 or 54 is immaterial to our policy discussion. I have faith, as always, in parliamentary counsel on such matters.
 Clause 54 provides that where the billing authority decides to veto a BID, any ratepayer who was entitled to vote in the BID ballot can appeal against the exercise of that veto to the Secretary of State. The clause confers on the Secretary of State the powers to make regulations regarding the timing of appeals, the manner in which an appeal is to be made, the procedure to be followed in connection with an appeal, and the factors to be taken into account when deciding whether an appeal is successful.—[Interruption.] I have a ringing in my ears, Mr. Conway, which suggests that perhaps I am taking too long to explain the clause. 
 Although it is important that the local authority has the power to veto proposals if it judges that a BID contravenes local arrangements of benefit to the community, it is equally important that businesses that invested time in securing a success in the BID ballot should have a right of appeal to the Secretary of State against the veto.

Robert Syms: Can a person appeal if they were entitled to vote, even if they did not vote in the ballot, either for or against?

Christopher Leslie: Yes. If they are entitled to vote they will have that right of appeal. As we said in the White Paper when we first made the proposals, the Secretary of State would consider the views of both the council and the rent payers who supported the BID. The council would have to show that in exercising the veto it was acting reasonably and in the interests of the wider local community.

Andrew Turner: It is extraordinarily difficult to see how a local authority can act reasonably when it has vetoed a BID post ballot, having failed to exert its influence sufficiently strongly through all the mechanisms that are available effectively to veto that BID pre-ballot. Is it not almost inconceivable that a local authority could be acting reasonably in so doing?

Christopher Leslie: I can certainly concede that it is difficult to envisage circumstances in which an authority would exercise its veto. It is not impossible to imagine circumstances in which a local authority would come into conflict with people proposing a BID, although it is unlikely. There might conceivably be some conflict between the interest that it has a duty to observe for the general people in its vicinity and the interests of the ratepayers as represented by BID proposers, although it is difficult to imagine. There would have to be a burden of proof on the local authority to show that it was acting reasonably in exercising that veto. Appeals could be made to the Secretary of State.

Robert Syms: Perhaps I can help the Minister. There might be a vote for a BID followed a month or two later by a vote for the council. The political control of the council could well change and so the priorities in a particular area would change. It is also possible to have a BID district across two London boroughs. One of those boroughs might well change its mind as a matter of policy. All those issues might well lead to change.

Christopher Leslie: My understanding is that a veto can take place only up to the point when the BID arrangements come into place and are up and running. It is not possible for the veto to be exercised after that point, so I cannot see that such a circumstance is likely. As I said in response to the right hon. Member for Skipton and Ripon (Mr. Curry), the provisions are mostly to strengthen the local authorities' arm, so that right from its inception they are included by the BID proposers in drawing up something that is likely to have all parts of the local community on board. That is why I believe that we have struck the right balance in this case. We have the safeguard of the appeal system if needs be.
 Question put and agreed to. 
 Clause 54 ordered to stand part of the Bill.

Clause 55 - Commencement of BID arrangements

Question proposed, That the clause stand part of the Bill.

Andrew Turner: It would be out of order if I prolonged the debate on the previous two clauses, but this clause talks about the commencement of the BID arrangements. The Minister has just referred to the local authority only having the power of veto between the ballot on the BID and the commencement of the arrangements. Clearly the local authority's power depends on the extent of the period available between the ballot on the BID and the commencement of the arrangements. I am not sure whether the clause allows a reasonable period for the local authority to consider the matter and for local elections and the conclusion of a consultation on its local strategy to take place before the implementation of the BID arrangements. Does it merely provide for the implementation of such administrative arrangements as are necessary? Indeed, once we start putting those administrative arrangements in place, is that a signal that the BID arrangements have begun to be put in place?
 Surely the BID arrangements would be put in place from the moment that the results of the ballot were announced—rather like the arrangements for MPs. It would be difficult for the Minister to identify a period during which the arrangements had not commenced. Perhaps the clause clarifies when the arrangements commence, but from my initial reading I have not found that easy to identify. I am becoming increasingly concerned about why the local authority should require a power of veto after the ballot. If the local authority is so concerned that its community strategy or policies would be inhibited by the BID arrangements, why have those arrangements reached the stage of a ballot? I appreciate that I am not allowed to go over old ground. Will the Minister explain when the BID arrangements commence?

Edward Davey: I rise partly to help the hon. Member for Isle of Wight and also to place on the record that in Kingston we hope to have a BID up and running by this time next year. There may be a ballot in Kingston for a BID in the coming autumn/winter. As I understand it, although the BID proposals in Kingston have not yet been published, according to subsection (3) the day on which the BID proposals come into force has to be set out and arranged as part of the proposals themselves. It is up to local discretion. It is not on the day or the day after the vote has taken place. I hope that that explains the matter to the hon. Gentleman.

Andrew Turner: In effect, it means that the local authority would be prevented from exercising its veto, because the BID proposals could include a provision that the arrangements should come into effect the moment the ballot result is announced.

Edward Davey: That is not my understanding of the veto arrangements. Perhaps the hon. Gentleman will intervene to explain why his understanding is different. My understanding from debates within the local business community in Kingston upon Thames is that they will leave a short period after the vote takes place to make the necessary legal arrangements for incorporation and so on, but because they are practical business people they want to push ahead with setting up the business improvement district to derive the benefits from it.
 They want to ensure that the benefits they seek to make Kingston a cleaner, safer, well-maintained and better-promoted town centre are achieved as early as possible. I am pleased with the way the Government have phrased clause 55. It leaves discretion for the local BID proponents to decide exactly when the commencement of the BID arrangements suits them in order to deal with the practical issues that they will face. I would not want to see it amended, and I hope that it will be carried.

Christopher Leslie: Under clause 55, when a BID proposal is approved by a ballot, the local billing authority must ensure that the BID arrangements come into force on the day specified in the BID proposals. The hon. Member for Kingston and Surbiton (Mr. Davey) was right to point out that there will be an opportunity for transition between the proposals and the
 arrangements. That is the point at which a veto can be exercised.
 If a BID is vetoed, the BID arrangements cannot come into force unless the Secretary of State allows an appeal against the veto. In that case, the BID arrangements will come into force on the day determined by the Secretary of State. That day cannot be before the day specified in the BID proposals, and before determining which day it should be, the Secretary of State must consult the billing authority and representatives of the ratepayers. I appreciate the question asked by the hon. Member for Isle of Wight about whether the arrangements could come into force on the day after a ballot. That is an especially interesting point. I have made inquiries, and it appears that it is possible in theory, if unlikely. However, they could and do come into effect on the date specified in the proposals. I will re-examine the guidance, but it suggests that there should be a reasonable period of time between proposals, the date of the result of the ballot and the date when the arrangements come into force to ensure that all parties have sufficient opportunity to consider whether they need to exercise any powers under the provisions. 
 Question put and agreed to. 
 Clause 55 ordered to stand part of the Bill.

Clause 56 - Duration of BID arrangements etc

Question proposed, That the clause stand part of the Bill.

Geoffrey Clifton-Brown: I should like to probe the Minister on subsections (4), (5) and (6). The Minister rejected my practical proposal that some estimate should be given before the BID comes into operation. Given the use of modern computers and the average size of the BID—probably a few hundred people—I suggested that it would be relatively simple and inexpensive to communicate at least an estimate of how much each business was likely to have to pay to give it greater certainty in planning its business.
 Do the provisions specified in subsections (4), (5) and (6) relate generally to all BIDs, or are there specific regulations for each BID? 
 Subsection (4) states: 
''The Secretary of State may by regulations make provision . . . as to the alteration of BID arrangements, and . . . as to the termination of BID arrangements.''
 I presume that that is the power to terminate them if they start to go wrong financially. That power is then circumscribed by subsection (5), which states: 
''The provision which may be made by virtue of subsection (4)(a) or (b) includes provision preventing or restricting the alteration or early termination of BID arrangements.''
 Subsection (5) is unnecessary, as the Secretary of State already has the power in subsection (4). If subsection (5) is superfluous, subsection (6) is wholly superfluous. It states: 
''Nothing in subsection (5) is to be taken as limiting the power conferred by subsection (4).''
 Will the Minister comment on that? The drafting is very clumsy. Subsection (5) could be removed, as 
 could subsection (6), and nothing would be lost from the Bill.

Robert Syms: I have a similar point. Under subsection (4), I perfectly understand the Secretary of State having powers of termination, as the scheme would need to be wound up if it got into difficulty before the end of five years.
 On alteration of the BID arrangement, a proposal can be made, voted on and implemented, yet the Secretary of State can unilaterally alter the arrangements on which that proposition is based. That might mean increasing the amount of tax that the businesses have to pay. Will the Minister say what he means by alteration in this particular clause? Are we talking about minor technical changes or about major changes that could alter the proposition on which people have voted?

Christopher Leslie: The clause allows BID arrangements to be in place for a period of time specified in the proposals, but not exceeding five years. The BID arrangements may be renewed for further periods, although, each individual period cannot exceed five years. That means that any successful BID can continue to work after the initial period decided in the BID arrangements. A ballot of ratepayers liable for the levy must approve the renewal of the BID arrangements. That ballot will be subject to the same rules as set out earlier. Approval for renewing the BID must be secured to the same dual-key mechanism that was used to secure the first vote. A time limit of five years means that a BID cannot charge ratepayers an additional levy indefinitely; it must be regularly approved by a vote if it is to extend beyond five years.

Desmond Swayne: If the arrangements have been put in place by the means described by the Under-Secretary, including the dual keys, what happens if the Secretary of State makes regulations under subsection (4)(a) and (b) that change the BID arrangements? Will that change the arrangements for BIDs that are already established or is it just a general power that will affect the arrangements for BIDs that come into force subsequently?

Christopher Leslie: That is the question that the hon. Member for Poole (Mr. Syms) asked—whether the alterations would be significant. The clause grants the Secretary of State the power to make regulations regarding the alteration or termination of BID arrangements. We would expect BID arrangements to contain rules on how the business improvement district could be wound up prematurely if the parties to the BID so decided, and the regulations will be general rather than for specific BID proposals.
 Again, we want to ensure that safeguards can be put in place, which is the purpose of clause 56 providing the Secretary of State with the ability to make alterations or terminations. They will provide a fall-back to allow a BID to be altered or terminated early if BID members decide to do that in the light of experience but the specific BID arrangements contain insufficient provisions. The regulations could provide a mechanism to deal with such matters as outstanding 
 contracts or assets that a BID may have when it dissolves. 
 In setting out the regulations, we will make it clear that we do not envisage the Secretary of State using them to intervene directly in the operation of a business improvement district. Alterations and terminations will take place only in rare and exceptional circumstances, and the presumption will always be the protection of the ratepayers by ensuring that large and unforeseen burdens do not fall on them. It may be helpful for me to circulate an indication of our policy intent on the use of the regulations to give a clearer and more in-depth picture of how we envisage using the regulations, if at all. That may also help enlighten any debate on Report.

Geoffrey Clifton-Brown: The Minister wholly failed to answer the point, which I perhaps put too quickly. I will put it more slowly as he did not take it on board the first time. Why are subsections (5) and (6) necessary?

Christopher Leslie: I took it on board, but I was more concerned with a couple of other points. The clause gives drafting protection to the Secretary of State's ability to make the regulations. I shall be happy to speak again to parliamentary counsel who helped draft the clause, but the subsections make it copper-bottomed and crystal clear that the Secretary of State has the power to make the regulations. I am content with the drafting.

Geoffrey Clifton-Brown: What power does the Secretary of State not have under subsection (4) that is given to him by subsections (5) and (6)?

Christopher Leslie: Those powers set out in subsections (5) and (6).
 Question put and agreed to. 
 Clause 56 ordered to stand part of the Bill.

Clause 57 - Regulations about ballots

Question proposed, That the clause stand part of the Bill.

Geoffrey Clifton-Brown: I want to probe the regulations. Subsection (1) gives the Secretary of State almost unlimited power to make regulations as he wants, but that is fettered a little by a list in paragraphs (a) to (h) in subsection (2). However, subsection (3) shows that this is a catch-all clause:
''Nothing in subsection (2) is to be taken as limiting the power conferred by subsection (1).''
 What is the point of subsection (2) if the Secretary of State can do what he likes anyway? It is fairly outrageous that the power of primary legislation is fettered in that way. If we prescribe the power that he can use and make a list, why override it as subsection (3) does? I should be grateful if the Minister would comment on that. There is too much of that undemocratic drafting. 
 As I have said, I dislike regulations. Where possible, as much as possible should be put in primary legislation. Presumably that is why subsection (2) contains a list. What is the point in producing a list if 
 the Secretary of State can immediately override it with the powers that he has given himself?

Christopher Leslie: I take it from that contribution that, in general, the hon. Gentleman accepts that the Secretary of State should be able to make regulations providing for the timing of a ballot, who should vote, the persons who are to conduct it and so on. Subsection (2) says, as is normal practice in legislation, that specific issues can be covered in the regulations. The list is not exhaustive, but it gives a clear indication in the Bill of the core factors that we expect to be part of the regulations, so as to avoid challenge on those aspects.
 Subsection (2) refers to 
''The provision which may be made by regulations under this section''.
 As I have said, subsection (3) conforms to standard drafting practice. It is not a new phenomenon. 
 Question put and agreed to. 
 Clause 57 ordered to stand part of the Bill.

Clause 58 - Power to make further provision

Question proposed, That the clause stand part of the Bill.

Geoffrey Clifton-Brown: Clause 58(2) states:
''The provision which may be made under subsection (1)—''
 again, that is the Secretary of State making regulations— 
''includes provision—''
 these are the important words— 
''amending any enactment (whenever passed or made).''
 It is outrageous that the Secretary of State should take power to himself to fetter any future enactments made by Parliament. He is trying to circumvent the whole British constitutional law that one Parliament cannot bind its successor. 
 The clause should be struck out. I think that it is the parliamentary draftsmen having a poke at the democratically elected Parliament. They thought that we would not notice. I hope that their lordships will strike out the clause. I did not table an amendment, because I knew that the Government would use their overbearing majority to vote it down, but having placed that on the record, I hope that their lordships will take note and strike out the clause.

Andrew Turner: I am happy to support my hon. Friend on the Front Bench in his hostility to the clause. A similar clause appeared in the Education Bill on whose Committee I was privileged to serve—I believe under your chairmanship, Mr. Conway; I cannot quite remember. It seems to be a trend among Ministers to want the power not only to push legislation through the House—given a majority, that is not unreasonable—but to change the law where they forgot to make a particular arrangement when pushing that legislation through.
 Given the number of different ways in which Ministers can regulate, legislate, direct, order and 
 otherwise fetter the liberty of the subject, it is profoundly important that we scrutinise to the greatest possible extent the exercise of their powers. However, the clause simply does not permit Parliament to do that effectively. What I have said may not apply to the Under-Secretary, who is a reasonable and, as far as I can see, an honourable man. It may not even apply to the Minister for Local Government and the Regions, who is not in his place at the moment, but who has shown in his munificence to the Isle of Wight that he is reasonable and honourable. He will further demonstrate those qualities if he accepts my invitation to visit my constituency and receive the plaudits of the multitude for his actions.

David Curry: Given that the same generosity was not apparent in the case of North Yorkshire, is the Minister only reasonable and honourable south of a particular line in the United Kingdom?

Andrew Turner: I accept that on the north island, as we call it, the Minister might be regarded in a different light, but for the time being, in the Isle of Wight, he is seen as a reasonable and honourable man. His right hon. Friend the Deputy Prime Minister, who has just shown his desire to bulldoze the north and concrete over the south, has a different approach to local democracy. I will not drift into other aspects of legislation, even though the clause entitles me to do so.

Derek Conway: Order. Not too much drift, I hope.

Andrew Turner: I can drift into aspects of any housing measure, which may include the Planning and Compulsory Purchase Bill, which was recently in Committee, because the clause gives the Secretary of State the power to amend any legislation.
 Although it is unlikely given their lordships' care in scrutinising such Bills, let us assume that the Planning and Compulsory Purchase Bill had been pushed through the House unamended. What would happen if their lordships then managed to obtain a trifling concession, with which the Minister was dissatisfied, but on which he had to yield to their lordships, because this House has recently, by not one but seven votes, demonstrated satisfaction with the current arrangements for the upper House? Then what would happen if the Minister, having made a minor concession to their lordships, decided a week later that he was not satisfied and wished to overturn it and it claw back from their lordships? 
 The hon. Member for Oldham, East and Saddleworth (Mr. Woolas) is making a winding motion. I understand he has to keep himself awake, but I am explaining exactly what Ministers are proposing. They do not want to wind the clock forward, as the hon. Gentleman is doing, but to wind it back, so that they can retrieve any position that they have been forced by their lordships' House or by this House to concede. That could affect almost any measure concerning landlords and their arrangements with tenants; local authorities and their arrangements for the provision of housing; registered social landlords and borrowing undertaking by them; and the Audit Commission and its intervention in how local government works.

Desmond Swayne: My hon. Friend is expounding the scope of part 1 of the Bill. Does he agree with my analysis that the scope of part 2 includes the Human Rights Act 1998?

Andrew Turner: Indeed, so it appears. Mr. Conway, perhaps you could tell me if I will be straying out of order by talking about the Human Rights Act 1998. Until you do so, I will assume that the proposal also covers that Act.

Paul Goodman: Is my hon. Friend not being a little unfair to the Minister who has been scrupulous throughout the Committee? Is it not reasonable to assume that the Minister will have had detailed discussions with the Deputy Prime Minister about the circumstances in which he is likely to exercise the powers in clause 58(2)? In replying to my hon. Friend, I hope that the Under-Secretary will give us chapter and verse of his detailed discussions with the Deputy Prime Minister and let us know when these powers will be exercised.

Andrew Turner: I thank my hon. Friend for that helpful intervention. I am sure that the Under-Secretary, with his customary scrupulousness, will have attempted to direct the Deputy Prime Minister's attention to the clause in order to clarify the matter to which my hon. Friend refers. If the clause indeed covers the Human Rights Act 1988, the Under-Secretary will also have sought the advice of his noble Friend the Lord Chancellor. I do not know when he was last entertained in the Lord Chancellor's capacious apartments—

Paul Goodman: After the vote. [Laughter.]

Andrew Turner: Had I known that such an invitation were available, I would have been rather more sanguine about making it clear at an such early stage to my hon. Friends which way I intended to vote. The noble Lord might then have felt the need to encourage me to vote in the same Lobby as the Prime Minister on that singular occasion.
 I do not need to detain the Committee indefinitely on the issue. I simply want to put it on the record, with no fear of misunderstanding, that the provision is so immensely wide-ranging that it would allow the Secretary of State to abolish the Welsh Assembly at the stroke of a pen and deprive it of all its powers over local government, education and so forth—even over fisheries or the Severn tunnel bridge, if it has any powers over them—or, alternatively, to hand such powers to the Welsh Assembly. That is wholly unacceptable to this Committee—[Interruption.]

Derek Conway: Order. I welcome the Wales Office Minister to our proceedings.

Christopher Leslie: Such an eloquent contribution from the hon. Member for Isle of Wight will doubtless feature as a cornerstone of the section of his autobiography on his time in Parliament—the ''Severn tunnel bridge'' sounds like a wonderful erection, but he may not want it to appear on the log of his parliamentary career.
 I hate to deflate the Opposition's scrutiny, particularly that of the hon. Members for Cotswold (Mr. Clifton-Brown) and for Isle of Wight, who 
 spotted the provision ''amending any enactment''. However, I must draw the Committee's attention again to the manner of the framing. If hon. Gentlemen examined it more fully, they would see that the amending provisions are made under subsection (1), so subsection (2) is fundamentally linked with it. It is self-evident from subsection (1) that it is all about giving full effect to the proposals on business improvement districts, with the clear proviso that the Secretary of State's power to make regulations applies only to 
''such supplementary, incidental, consequential or transitional provision as he considers necessary''.

David Curry: In contrast to my colleagues, my attention was drawn to subsection (1). Will the Minister clarify the distinction between ''supplementary'' and ''incidental'' on the one hand, and ''necessary'' and ''expedient'' on the other?

Christopher Leslie: As the right hon. Gentleman will be aware, I am confident enough to place a wager on the fact that a similar provision was incorporated into legislation that he passed when he was Minister of State for Local Government and Planning.

Desmond Swayne: The difference is that he knew what it meant.

Christopher Leslie: The right hon. Gentleman may well have known what it meant at the time, but he clearly does not know now. ''Supplementary'' refers to matters other than the original ones; ''incidental'', ''consequential'' and ''transitional'' are self-explanatory—all are limited to the purpose of giving effect to business improvement districts and no other purpose. It is a narrow, reserved power designed to ensure that the provisions in this part of the Bill and subordinate legislation work as they are intended to and not for any wider reform of the Human Rights Act. It is not to be read as a self-standing power.
 I hope that those assurances help hon. Members. I will research legislation prior to 1997 to find out how many other examples there were before I became an MP. 
 Question put, That the clause stand part of the Bill:—
The Committee divided: Ayes 17, Noes 6.

Question accordingly agreed to. 
 Clause 58 ordered to stand part of the Bill.

Clause 59 - Crown application

Question proposed, That the clause stand part of the Bill.

Geoffrey Clifton-Brown: Before the Committee adjourned before lunch, someone—I think it was my hon. Friend the Member for Poole—rather mischievously asked whether Her Majesty would be subject to these provisions. The purpose of rising on this clause is to find out whether the Crown in the name of Her Majesty is bound by the clause and, if so, whether one of her properties could become part of a BID, in which case she would have a vote. Perhaps the Minister will give us the answer.

Christopher Leslie: The clause states:
''This Part binds the Crown.''
 It is a simple sentence, yet it contains so much.

Geoffrey Clifton-Brown: Is it incidental or supplemental?

Christopher Leslie: Clause 59 provides that any Crown property, which will be mainly central Government property, will be liable for the BID levy where the Crown property falls within a business improvement district. Crown properties have been liable to pay non-domestic rates since 1 April 2000. If they fall within a business improvement district as defined within the proposals, those properties will also be liable to pay the additional BID levy and will have a vote in the BID ballot.

Andrew Turner: Can the Minister tell me who votes for the Queen?

Christopher Leslie: The ratepayer will have the vote in those circumstances. I hope that that is helpful and that we can allow the clause to stand part.

Geoffrey Clifton-Brown: This needs to be clear. Government have got themselves into this position, so they need to answer. If one of Her Majesty's properties forms part of a BID, does she or someone on her behalf have a vote in the matter?

Christopher Leslie: That would be a matter for Her Majesty and her offices. As for any ratepayer, we should observe the privacy of that individual ratepayer to make their own arrangements on rates payment. [Interruption.] I feel quite content in what I have said, so I hope that the clause stands part.
 Question put and agreed to. 
 Clause 59 ordered to stand part of the Bill. 
 Clause 60 ordered to stand part of the Bill.

Clause 61 - Interpretation of Part 4

Question proposed, That the clause stand part of the Bill.

Geoffrey Clifton-Brown: I am afraid that we need to rehearse—or re-rehearse—the question of unitary authorities, because clause 61, uniquely in the Bill, uses the term ''unitary county council''. Does that term include all unitary authorities? Does it include unitary metropolitan district councils? It is another example of how untidily this and other Bills have been
 drafted, and we will need to tidy up the term, particularly as the Government are proposing more unitary authorities for this country. Will the Under-Secretary consider that matter, if not today then perhaps at a later stage? We raised it with the Minister for Local Government and the Regions recently, and we will continue to raise it every time we get a list of local authorities until the matter is tidied up.

Christopher Leslie: I understand the hon. Gentleman's point. It is interesting that unitary councils are referred to only in certain legislation. In clause 61, the definition of ''unitary county councils'' is clear. It does not include unitary authorities, but the other parts of the billing authority will, not least because billing authorities will be at that tier of local authority. Those matters are adequately covered.
 Clause 61 deals at length with definitions of terms in part 4 and provisions about central list ratepayers. I commend the clause to the Committee. 
 Question put and agreed to. 
 Clause 61 ordered to stand part of the Bill.

Clause 62 - Submission of proposed rating lists

Question proposed, That the clause stand part of the Bill.

Geoffrey Clifton-Brown: I hear the usual channels cheering. I told them that I thought that we might get to clause 62 in half an hour. It has taken us almost an hour, and I gather that we are about to have a vote in the House.
 Part 5, on non-domestic rates, is a complex part of the Bill, and several matters need to be raised. No amendments have been tabled to clause 62, so we are having only a clause stand part debate. The clause deals with revaluation, for which new lists have to be drawn up. Under the old system, provisional lists had to be made three months before they were finalised on 1 April. Clause 62 simply changes that time to six months, which is to the end of September. The clause is welcome, but it shows that if modern computer technology exists to do that for rating lists, it should be perfectly possible under the BID arrangements to provide estimates. If that can be done for all 1.65 million non-domestic ratepayers, why is it not possible to do that for a few hundred BID submissions? I hope that the Minister will consider that. 
 The clause is welcome. It is a change that will be welcomed by businesses because it will give them more time to plan their financial affairs.

Christopher Leslie: It is a pleasure to reach part 5 at last. I hope that we can make good progress. Under the Local Government Finance Act 1988, all property has to be revalued every five years. The next such revaluation will take place on 1 April 2005. Sections 41(5) and 52(5) of that Act provide that valuation officers must have completed drafts of the new rating lists three months before the revaluation takes effect, and the drafts are then made available for ratepayers to inspect. Clause 62 requires that valuation officers complete the draft rating six months in advance of the revaluation, thereby allowing ratepayers more time to
 plan ahead to meet changes in their rateable values. Giving more notice to ratepayers in that way and giving them greater opportunity to scrutinise the changes should be widely welcomed. Six months, not three months, is the right period to allow them.

Desmond Swayne: I entirely agree. The time allowed is much preferable. It is twice as good as it was before. However, even within the short-term arrangements for shops and enterprises, six months is a relatively short time to change one's behaviour to take account of what might be significant changes in revenue and variations in profitability. Will the Minister say how much more notice it would have been possible to give? How difficult would it be to change the arrangements to give twice as much notice? Can that barrier be pushed back even further? What are the costs and benefits?

Christopher Leslie: Much of the constraint on how much notice can be given is built into the mammoth task of undertaking a revaluation. The Valuation Office Agency—

David Borrow: Will my hon. Friend give way?

Christopher Leslie: The Valuation Office Agency will be able to elaborate on that, but my hon. Friend may, with his experience, be able to elaborate even more.

David Borrow: Does my hon. Friend agree that it is crucial to have an up-to-date and accurate rating list? The longer the notice of the valuation list given to ratepayers, the further back the antecedent date must go, and the more likely it is that the rating list will be out of date when it is introduced on 1 April. Does he agree that a balance must be struck between the two?

Christopher Leslie: My hon. Friend has given one of several possible reasons why there is a constraint on the length of notice that can be given. Six months strikes the right balance.
 The hon. Member for Cotswold in a sense warmed up with new clause 6 on BIDs. Again, to send out a fresh bill that gives an estimate would be extremely costly. Incidentally, the Conservative party never provided for that in the 1988 Act. 
 I hope that the Committee will accept the clause. 
 Question put and agreed to. 
 Clause 62 ordered to stand part of the Bill.

Clause 63 - Small business relief

Question proposed, That the clause stand part of the Bill.

Geoffrey Clifton-Brown: This is an incredibly complicated clause that deals with large numbers of formulae. Hon. Members will see that the formulae start on page 25 and go on to page 26. If they are still awake by page 27, pages 28 and 29 will certainly send them to sleep.
 We accept that small businesses have higher proportionate costs. We therefore welcome the small business relief that the clause provides. However, we 
 note that the maximum qualifying threshold E—introduced in proposed new section 44(9) under subsection (5)—is to be prescribed. I understand that the reason for that is that there is a maximum up to which small businesses still qualify for small business relief. I would like to probe the Minister on that maximum. 
 I understand that the current maximum is £8,000. The Small Business Bureau believes that it should be £10,000, with a buffer of up to £25,000.

Valerie Davey: The hon. Gentleman is right that the clause, and subsequent clauses, are complicated. I tried to understand them myself and was not clear whether the small business relief applied to all ratepayers with properties with a rateable value lower than the thresholds indicated in the explanatory notes, or just to small businesses. If it applies only to small businesses, I am not clear whether that distinction is made under subsection (3), proposed new subsection (4B)(a)(iii).

Geoffrey Clifton-Brown: That technical question should be for the Minister, not for me.
 As I understand it, the clause relates to rateable value. The size of the business does not matter when one pays non-domestic rates. It is the rateable value of the business that counts. I understand that the maximum rateable value to qualify for small business relief is £8,000.

Valerie Davey: That is an important point. Many hon. Members rent offices in their constituencies on which they pay non-domestic rates, so they will probably benefit from the relief. If that is the case, hon. Members should declare an interest at the beginning of their speeches.

Geoffrey Clifton-Brown: The hon. Gentleman asked me a technical question, and I gave him what I perceived to be the answer. If I am wrong, no doubt the Minister will tell me so.
 I understand from reading the clauses that the small business relief will be funded from the overall pot. That means that the general non-domestic ratepayer will be paying more to compensate for the small business relief. We have received some representations saying that the relief for small businesses should be funded out of a separate pot, because a separate multiplier and provisions are applied to small businesses. Some larger businesses, which do not receive the relief, are aggrieved at having to pay extra to fund small businesses that may be competing with them. It is a question of equity. Will the Minister comment on that issue? 
 Sitting suspended for a Division in the House. 
 On resuming—

Geoffrey Clifton-Brown: The problem with small business relief, which we strongly support, is that it has to be funded out of the overall pot of national non-domestic rates. That effectively means that big businesses subsidise smaller ones that receive such relief but might well be competing against those big businesses. It might be prudent to maintain the
 discretion—not the duty—to allow separate funding for small business relief. As I understand it, the clause removes that discretion.
 I am sure that the hon. Member for Kingston and Surbiton is aware of this, but the explanatory notes reminded me that mandatory rate relief of 50 per cent. is available for properties up to £3,000 of the rateable value and will decline on a sliding scale as the rateable value increases, with no relief above £8,000.

Desmond Swayne: Does that 50 per cent. figure arise from the formula A times D over C times E, or has it been plucked from somewhere else?

Geoffrey Clifton-Brown: I am sure that my hon. Friend has had a chance to read the Bill. He will have made up his own mind. Perhaps the Minister will able to clarify the matter. That just shows how complicated these formulae are. Someone asked me on the way here, ''Does anybody understand it?'' There are people who make their living doing nothing but trying to work out these formulae and how they apply to individual calculations for non-domestic rates.

Desmond Swayne: Is it a good living?

Geoffrey Clifton-Brown: They do nothing else. If I responded to a sedentary intervention, it would be go on the record, so I shall not do so. However, it has put me off my stroke. I will have a word with my hon. Friend afterwards. I cannot quite remember where I had got to. [Hon. Members: ''It is complicated.''] Yes, it is incredibly complicated. The Minister will no doubt seek to explain it all.

Christopher Leslie: The 50 per cent. figure arises out of the factor to be prescribed with the letter E.

Geoffrey Clifton-Brown: Under subsection (5), in proposed new subsection (9),
''E is such amount as may be prescribed''.
 I was wondering about that question, and the Under-Secretary has confirmed it. My hon. Friend did the Committee a service by bringing it up. A question arises therefore about whether the Secretary of State may alter that £3,000 in any one year. Will the Under-Secretary say how that sum will keep up with inflation or property inflation?

Valerie Davey: I do not know whether I have to declare an interest, but I rent an office in my constituency and pay rates through the allowance.
 The Government are on to a good thing with the small business rate relief, as the uniform business rate hits small businesses disproportionately hard. All the research evidence clarifies that—from both the academic world and business interest groups. It is clear that we need to find a way to reduce the burden of business rates on small businesses; the question is how to do that. The Government have gone for a targeted approach, and to the extent that it reduces the burden on those whom the Government are asking to pay, one might argue that it is fairer a system. 
 Like the hon. Member for Cotswold, I would have preferred it if the Government had invested some money and reduced overall business taxation with the 
 relief. The Liberal Democrats have argued for a business rate allowance so that every business that paid the business rate would receive a lump sum off it. That would act fairly, because a lump sum would be like a reverse poll tax, so the poorer businesses would benefit most. The Government have gone for that in a way, but they have tried to claw it back. My concern is that that creates extra complexity. 
 Business rates work relatively simply for normal businesses. Complications exist at the edges, but overall the tax is well understood. However, there is a danger of making it more complicated by introducing clawbacks and sliding scales. We must scrutinise the proposals to see whether it is worth the complexity to save revenue. Is it worth the candle to add complexity and bureaucracy and force the private sector to spend more time dealing with it? Would it not be simpler to go for a straight allowance system of a lump sum off the business rate bill for every business? I make that policy point not in opposition to the small business rate relief, because cutting the rate bill will attract support from Members on both sides of the House, but I question whether there could be a less complex and more efficient way of achieving the same goal. 
 However, I want to raise a point that the CBI raised with me. I do not necessarily agree with it, for reasons that relate to what I just said, but it is worth touching on the point, which others have made in other places. The CBI is concerned that, if we reduce the business rate through the scheme, landlords might be the only beneficiaries. Will tenants see any benefits? The idea is that rents go up pound for pound to accommodate the rate reduction due to an equilibrating mechanism in the business rental sector. I do not subscribe to that argument, but I understand it. The CBI and others have said that the Government need to monitor the policy closely to check that that does not happen. 
 Hon. Members on both sides of the Committee will not want the relief to be wasted, or for it to go to the landlords even though the intention was to give money to tenants and businesses that operate from various properties. Obviously, if the business owner is the freeholder, that point does not apply, but often they are not. Will the Government research the issue and keep the policy under review to check that the relief is not enjoyed by those for whom it was not intended?

Andrew Turner: I am interested in the hon. Gentleman's proposition, but how is it possible to prevent a reduction in a tenant's accommodation costs, which would give him more disposable resources, from being retrieved somehow by the freeholder? Obviously, the freeholder would be trying to attract the maximum income from the tenancy.

Valerie Davey: I am saying that I am concerned that that might be possible; I can imagine that in some cases it would not be. For example, there might be rental agreements that last a long time. At the end of that period, there might be some adjustment. There is a timing issue, which will clearly affect whether there is a one-for-one situation and how quickly the market returns to equilibrium.
 I am not necessarily convinced by the argument that I have outlined, because if it were true and the rates and the uniform business rate were increased, there would be no effect on the tenants, because rents would have to go down. The argument to the contrary is that there are some very unfair leases in this country and rent reviews are often only upwards. With some leases, there cannot be downward rent agreements. That might preclude the option that I have described. 
 However, let us say that we made illegal the provisions in leases for only upward rent reviews. The implication of the CBI's analysis is that if the Government pushed up rates, rents would go down and tenants would not be affected. Money would in effect be taken from the landlords. There is a problem with the CBI's analysis, but it raises a fair question. Will the Government monitor the policy in this respect and undertake the necessary research?

Geoffrey Clifton-Brown: The CBI did not put that point to us. In any case, I am not sure that it entirely holds water, because rateable value is related to rental levels. If rental levels increase, rateable value increases, so I cannot quite see the point that the CBI is trying to make.

Valerie Davey: In many respects nor could I, although my question about the CBI's analysis was slightly different. That is why I do not oppose the relief, although the CBI wanted us to do so. I think that the relief is a step forward, for the reasons that I have outlined. However, because that very reputable organisation has advanced a different argument, it is incumbent on the Government to consider it and to keep the policy under review as a result.
 My next point was taken up by the Select Committee and relates to the thresholds that the Government have said that they will introduce through regulations. We have heard that the mandatory rate relief will be available at 50 per cent. for properties up to the £3,000 level and will then be removed on a sliding scale up to the £8,000 level. 
 I was concerned to read that the Association of Convenience Stores, which represents many of the small retailers at which the relief seems to be targeted, has argued that, to be viable in the modern economy, a small store needs a turnover of about £4,000 a week. The threshold published by the Government suggests that the relief will apply only to small stores with a weekly turnover of less than £1,400. Organisations that represent businesses that will benefit from the relief are concerned that the threshold is too low. I recognise that there is a balance to be struck between giving the relief to those who will benefit, such as MPs, it appears, and the larger businesses that will have to pay under the Government's proposals. Will the Minister comment on that analysis from the Association of Convenience Stores, so that we can accept that the Government have got the balance right?

David Borrow: I should preface my remarks by saying that I shall not oppose the amendments.
 Assistance for small businesses is crucial. However, I have spent more than 20 years dealing with rating valuation, listened to many ratings surveyors, read 
 many books and attended many lectures in which the link between rates payable and rent payable has been part of the fabric of the discussion. The argument that increasing rates reduces rent and vice versa has been part of the culture and the understanding of the rating world for as long as I have been involved in it, which is since the mid-1970s. 
 I am concerned that, in the long term, the clauses will help not small businesses but landlords, by allowing them to increase their rents. The hon. Member for Kingston and Surbiton makes his points well. Many of the submissions that I have seen argue that we should be making such proposals, but the problem for small businesses is that they pay high rents in relation to the turnover of the business compared with large businesses in large business premises. Rates relate directly to the rents that are paid, which means that small businesses end up paying relatively high rates compared with large businesses.

Valerie Davey: The hon. Gentleman gives the Committee the benefit of his long experience and substantial knowledge of these issues, which are second to none. Does he agree that if the Government want to help this sector, they should abolish upward-only rent reviews?

David Borrow: That is another issue, and I am not sure that the Bill should deal with it. Rent reviews have made it more difficult for small businesses. When I first became involved with rating valuation, rent reviews were often conducted every five or seven years. High inflation during the late 1970s and 1980s meant that the period was often only two or three years, and that there were often upward-only rent reviews. When the rental market has dropped and there has been a recession in a particular area, the rents payable have not reduced.
 I worked in Liverpool in the 1980s, when many small businesses had only upward-only rent reviews and could not see their rents reduced even though the business was not paying on such levels. Businesses would quite often leave premises and sub-let to other businesses at a lower rent than they were paying as tenants simply to dispose of their interest in the property. 
 My experience at the end of the 1980s after 17 years of the 1973 valuation list was that, during the boom in the London property market, the proportion of the rent that was payable in rates was trivial. Very often, 10 per cent. of the rent was paid in rates. In parts of Liverpool, the rates paid were often three or four times the rent. There is a direct relationship between rent and rates. After the revaluation in 1990, rates fell in certain areas because there had been no revaluation, and that chemistry between rates and rent came into effect. In other areas, rates went up fairly rapidly because the rate burden had been reduced. There is a link, and it is important for Ministers to ensure that a close eye is kept on the way in which the rental market operates, particularly for small businesses. 
 The Government seek to give relief to small businesses through these measures, which have been argued for strongly by the small business lobby for many years. That is a good thing, but the Government 
 must ensure that in four or five years' time they have made a real difference to small businesses and not simply put the money into someone else's pocket.

Valerie Davey: The hon. Gentleman makes an important contribution and I am sure that those on the Government Front Bench are listening carefully. Given his historical analysis, and now that we have moved into a low-inflation environment, does he not think that it is time for the Government to outlaw upward-only rent reviews?

David Borrow: If the market operated properly, there would not be rent reviews that are downward only or upward only. It would be interesting to see what the business community thought of such a proposal. I suspect that the Government will be lobbied in different directions by different sections of the business community.

Robert Syms: Perhaps Ministers can explain why there is a different formula for England and Wales? The explanatory notes on the clauses give details for the scheme in England, but say that the National Assembly for Wales will deal with the details of the scheme in Wales. Is that because rateable values may be different in Wales and the Assembly may wish to vary the scheme in that regard?
 The explanatory notes on subsection (7) state that in Wales billing authorities will have the power to grant discretionary relief to top up the mandatory scheme. Is that a new power, or is it in line with the powers that the unitary authorities in Wales already have? That raises the question why, if it is right to give such top-up powers to the unitary authorities in Wales, it is not in England.

Desmond Swayne: I thank the hon. Member for South Ribble (Mr. Borrow) for the enormous service he does the Committee by bringing his experience to the matter. I have learned a great deal from what he said. However, he prefaced his remarks with the bold statement that he was not going to press his independence of mind to the extent of voting against the amendments. The Committee may think that that was a bold statement, but I would like to point out that the Government Whip, the hon. Member for Oldham, East and Saddleworth, was not in the Room at the time—although, of course, he is aware of it now.

Valerie Davey: Snitch.

Desmond Swayne: Yes. There are, in fact, no amendments for the hon. Member for South Ribble to vote against, which rather defeats the object of his statement.
 The situation mentioned by the hon. Member for Kingston and Surbiton is worse than it was painted. The Association of Convenience Stores noted in its evidence to the Select Committee that the proposed threshold suggested a weekly turnover of £1,346, which is less than that required to sustain a viable business. Will the Minister tell the Committee what led the Government to decide on the proposed threshold? What informed that decision, and why did the Government discount the evidence given to the 
 Select Committee and the recommendation of that Committee that the Government should revise the thresholds in the light of the evidence that had been presented to it? Why did the Government not accept that recommendation? 
 Will the Minister also give the Committee an exposition of the other matter with which the Select Committee wrestled—the important question of how effective the relief is when there is significant evidence that it tends to benefit landlords rather than small businesses? The Select Committee drew attention to that and I wonder how far its deliberations have informed the Government's decisions on these matters.

Christopher Leslie: I shall try to deal with these issues. Like the hon. Member for Kingston and Surbiton, I am tempted to declare my interest as a ratepayer in my constituency office. I suspect that all hon. Members are in the same position. I am not certain, but believe that the customary rules, as applied to a change in income tax, for example, do not require us all individually to declare interests in advance of speaking. It is an important issue to reflect on.
 The clause allows rate bills to be reduced for small businesses and ratepayers who pay below a certain threshold of rateable value. I am proud to support such a popular scheme at this stage of the Bill. Research published by what is now the Department for Environment, Food and Rural Affairs in 1995 revealed that the rates were a particularly heavy burden on small businesses, as they represented a significantly higher proportion of operating profits than for large businesses. 
 The clause amends section 43 of the Local Government and Finance Act 1988. Where specified conditions are met, the rate bill for a property will be reduced by an amount prescribed by the Secretary of State in respect of England and by the National Assembly in respect of Wales. I hope that that answers the hon. Member for Poole's question about Welsh arrangements. If Wales wants to pursue a different scheme, the National Assembly has the power to prescribe its own arrangements.

Geoffrey Clifton-Brown: May I draw the Minister's attention to suggested new paragraph 3B(5) of schedule 7 to the 1988 Act? It states, in respect of Wales, that no adjustment can be made under subsection (3) for a financial year beginning before 2006. The clause clearly leaves some arrangements in place until 2006, so why is that the case in Wales, but not in England?

Christopher Leslie: I may have lost the reference that the hon. Gentleman made, so I shall answer the point when we reach later provisions on Wales.
 In England the power will be used to implement the scheme, as set out in our White Paper, and mandatory rate relief will be available for properties with rateable values of less than £8,000. The percentage of relief will be on a sliding scale: 50 per cent. for properties with rateable values up to £3,000, tapering off gradually so that properties with rateable values of £6,000 will have 
 their bills cut by 20 per cent. To qualify for relief, a business will have to apply to a local authority to declare that it occupies only the one property for which relief is being claimed. In England the scheme will be funded by a small addition to the bill of other ratepayers, and clause 64 sets out the means of doing that. We believe that the scheme strikes a fair balance between the interests of small businesses that receive relief and other ratepayers who fund it, while also being straightforward to operate.

Valerie Davey: When does the Minister intend to introduce the regulations, and when will the first rate bills affected by the scheme be applied? Will it be from April this year, April 2004 or even later?

Christopher Leslie: I shall endeavour to answer the hon. Gentleman later when I have done some more research, but I would first like to respond to the questions posed by the hon. Member for Cotswold. He asked why the scheme was not more generous to small businesses, and that point was echoed by the hon. Member for Kingston and Surbiton and by the hon. Member for New Forest, West (Mr. Swayne) who asked why the £3,000 figure tapering up to £8,000 had been pipped. We have tried to design a scheme that strikes the right balance between the interests of small and larger ratepayers. Interestingly, there are about 1.7 million rateable properties in England, and almost 1 million have rateable values of less than £8,000, so the majority of rateable properties will be included in some way or another in the scheme. We believe that it strikes the right balance. If the thresholds were set on one side or another, fewer or more would benefit.
 The hon. Member for Cotswold asked why other ratepayers should have to pay for the relief. We do not believe that the general taxpayer should necessarily subsidise a particular group of ratepayers. We believe that ratepayers, as the body of persons who contribute to that particular revenue stream, should be responsible for any schemes within that revenue scheme that give relief to small firms and small ratepayers. Cross-subsidisation from the general taxpayer is not a principle that we accept.

Geoffrey Clifton-Brown: Does the Minister not see some unfairness in that? It is not particularly fair if the larger businesses have to pay more to subsidise the smaller businesses that compete with them.

Christopher Leslie: If the hon. Gentleman is suggesting that the general taxpayer should subsidise the smaller but not the larger ratepayer, I do not believe that it would overcome his question about competition either. I do not believe that there is a particularly difficult competition point.
Mr. Curry rose—

Christopher Leslie: But I am sure that the right hon. Member for Skipton and Ripon does.

David Curry: When business rates bills are dispatched, will those in receipt of assistance have that amount specified? Will those who are paying a premium in consequence have the amount of the premium specified? That would be fair would it not?

Christopher Leslie: I doubt whether the bills will specify those amounts, although there is an argument to be had about this.

David Curry: It is said that the way to start a small business is to buy a large one. A small business that was in receipt of support could, by virtue of expansion, find that it was paying a premium. So over a period of time it equals itself out.

Christopher Leslie: I can see the argument that the right hon. Gentleman is making, but it could be very complicated to specify too many details on a bill, particularly in view of the complexity of the calculation for the rate relief. I believe that putting the final amount on the bill would be adequate, but I am open to debate.

Valerie Davey: The Minister has just given the Committee an interesting principle on which to ponder. It is impossible to give relief from business rates to one group in the business ratepayer community without another group paying for it. Somehow the business rate community is hermetically sealed. Can he explain why, when the Government reduced the lower rate of corporation tax that applies to small businesses, they asked the general taxpayer to pay for it and did not increase the corporation tax rate for the larger corporations? Following the principle that he has just outlined, that is what they should have done. The Minister seems to suggest that different principles apply to business taxation depending on which tax we are talking about—corporation tax or business rates. There does not seem to be any consistency in the Government's fiscal approach.

Christopher Leslie: The bill will convey information about what the ratepayer is liable to pay. It is public knowledge that the scheme we want to introduce will be in operation at the earliest by April 2004, when the small business rate relief will come into effect—a matter raised earlier by the hon. Member for Kingston and Surbiton. In the usual way, we strike the right balance between providing information and ensuring that the amount due is clear to the ratepayers.
 I will consider whether an explanation of the rate relief scheme might be included in the information sent to ratepayers in the same envelope as their bills.

Robert Syms: After revaluation there will be some transitional relief to businesses. What will be the impact in respect of the reduction for small businesses? Will it occur before or after the transitional relief? How do the two schemes go together? The Minister may want to write to me with answers to those questions.

Christopher Leslie: I shall certainly write to the hon. Gentleman on the matter.

David Curry: Places such as hospitals pay business rates, which means that a hospital would be levied in support of small businesses. A public service might well be levied in support of business activities. Is my interpretation correct?

Christopher Leslie: It is true that all large ratepayers above the threshold will contribute to some of the rate relief for smaller businesses. Small public services such as
 local council shops and the constituency offices of Members of Parliament, for example, may be a deserving case for a small business rate relief. Issues on both sides of the equation will be of interest to all hon. Members.

Desmond Swayne: The Select Committee and those who gave evidence to it on behalf of small businesses were deeply sceptical about the benefit of the proposal. It is now clear that the costs on other ratepayers are not insignificant, and the Minister should strongly reflect on that.

Christopher Leslie: I do not believe that is so, and the hon. Gentleman should himself reflect on the important principles in the system of small business rate relief. If he does so, he will agree that small businesses, more than others, need the most assistance because rates represent a greater proportion of the burden on them than on larger firms. Having a system to support small businesses is the right approach.

David Curry: One of the most aggravating aspects of small market towns is the number of charity shops, which are often accused of selling items other than those that have been donated. However, they qualify for a significant amount of relief. How will the proposals affect charity shops?

Christopher Leslie: The right hon. Gentleman makes a fair point. I suspect that the discount may apply to ordinary ratepayers and not necessarily to those that already receive special rates. It is unlikely that charity shops will have two reliefs, but if I am wrong I will write to the right hon. Gentleman.
 I want to make progress and reply to previous questions before I take new ones. However, I will give way to the hon. Gentleman.

Andrew Turner: I do not mind in what order the hon. Gentleman answers the questions. His reference to local council shops leads me to ask whether a small shop that is part of a big business gains the relief? A local council is a big business; if a business owns a large number of small shops, does each qualify for relief or, as I assumed on my first reading of the Bill, does it apply only to an aggregation of accommodation that falls within the single formula?

Christopher Leslie: The provisions that relate to qualification for the relief—a business will have to apply to a local authority to declare that it occupies only the one property for which it is claiming relief—should answer the hon. Gentleman's question. It was perhaps misleading of me to refer to a council shop, although a council could choose that property to be subjected to the ruling. I can imagine a number of smaller institutions that might be worthy of qualifying for relief.
 The hon. Member for Cotswold asked whether the £3,000 threshold for the 50 per cent. relief could be adjusted, and the answer is yes, under proposed new subsection (4B) in clause 63(3). Indeed, as has been done at previous revaluations, we will adjust 
 thresholds to take account of general movements in rateable values. 
 My hon. Friend the Member for South Ribble and the hon. Member for Kingston and Surbiton both asked whether, if a rate relief system comes into operation, rents would go up to compensate and, if so, what could be done. The CBI has also asked about that point, which we recognise is important. In the White Paper in December 2001, we stated that we would be keen to monitor the effectiveness of the relief system. We will keep a close eye on the matter, as my hon. Friend suggested would be prudent, and its details are covered by secondary legislation that can be adjusted in the light of experience. 
 Inspiration has struck me about the question on charity shops, and I recall that I was right at the time. Proposed new subsection (8B) in clause 63(4) makes it clear that charity relief applies, and no small business relief would apply for a charity with a rateable value below £8,000. Charitable relief is already worth 80 per cent. I hope that I have been able to address all the issues raised.

Geoffrey Clifton-Brown: I am sorry to trouble the Under-Secretary with one more point. Clause 63 provides for two different multipliers: one for small businesses and one for the main non-domestic rates. The Government can alter the current balance between small business relief and the increased, or decreased, costs to the main set of ratepayers. Do they intend to keep the main set of ratepayers and small businesses on the current ratio, or would it be possible for the Government to alter the ratio?

Derek Conway: Before the Under-Secretary replies, I note that we might be straying into the next clause. If it helps the debate, I am happy for him to answer, but we are straying.

Christopher Leslie: I suspect that this applies to clause 63 as well as clause 64. We have no plans to make significant changes to the broad ratios, although the clause would facilitate our ability to do that. As I said in reply to my hon. Friend the Member for South Ribble, if experience suggests that we need to shift the balance one way or another, we reserve the right to do so.
 At the time, I did not reply to the hon. Member for Poole about whether small business relief applies after transitional relief has been applied. I think that I undertook to write to him, but I can now tell him that transitional relief will apply in its application to small business relief as it applies to all other reliefs. I hope that that is clear, and I commend the clause to the Committee. 
 Question put and agreed to. 
 Clause 63 ordered to stand part of the Bill.

Derek Conway: I am grateful to Committee members for staying in order, because I could not have sorted it out if they had not.Clause 64 Calculation of non-domestic rating multiplier

Clause 64 - Calculation of non-domestic rating multiplier

Question proposed, That the clause stand part of the Bill.

Geoffrey Clifton-Brown: If clause 63 was complicated, clause 64 is even more complicated.
 I shall start with the evidence that the CBI gave to us. It says that the clause gives power 
''to claw back revenue lost on appeal''.
 The CBI says that this 
''would effectively break the RPI cap on Rates increases, and would remove the incentive for the Government to estimate losses on appeal accurately. Business places a high value on the current RPI-cap on UBR increases between revaluations. Breaking with this principle would add uncertainty to business planning. It might also lead to a less robust exercise on estimating the losses.''
 The point is simple, although it sounds complicated. Some businesses will appeal against a new valuation list. However, there is only one pot of money under the clause, so the success of some businesses in reducing their rateable values on appeal means a small increase for the rest. The CBI makes the point that this could break the RPI cap. 
 The UBRs are some of the highest property taxes in Europe, and the Government see a new valuation list as a convenient way of raising revenue without raising too much of a squeal from the public. Although the Minister made it clear that 1.64 million businesses are involved, they would suffer a much greater political backlash if they raised personal taxes than they ever do when they raise business rates. All Governments are therefore greatly tempted simply to raise business rates. Will the Minister say whether the Government intend to stick to the RPI cap? A reply would be useful. 
 I draw the Minister's attention to a technical point on line 30, page 29. I am not sure whether the drafting is correct. Subsection (7) states: 
''For sub-paragraphs (6) and (7) of that paragraph''—

Derek Conway: Order. I am sorry to interrupt the hon. Gentleman, but although the Bell is not working in the Room, the House is dividing. The Committee will therefore be suspended for 15 minutes.
 Sitting suspended for a Division in the House. 
 On resuming—

Geoffrey Clifton-Brown: Before the Division, I was drawing attention to clause 64(7), which refers to
''sub-paragraphs (6) and (7) of that paragraph''.
 Which paragraph is that? The subsection is pretty confusing, and I am not sure that the drafting is correct. I suspect that it is now too late to make my other point, but using the same letters with different meanings in the legislation causes huge confusion. It would have been much better to go through the alphabet and use different letters, so that each letter had a distinct meaning.

Christopher Leslie: It might help the Committee if I can aid the hon. Gentleman as we go through the provisions. He asks about the reference to ''that paragraph'' in line 30 on page 29 of the Bill. That is paragraph 5 of schedule 7 to the Local Government Finance Act 1988, which is amended by clause 64(5) to (7). I hope that that is helpful.

Geoffrey Clifton-Brown: That is very clear. I shall have to look at Hansard to ensure that the Under-Secretary has got it right, but I am sure that he has. Perhaps he can also say why the same letters are used with different meanings. The legislation is difficult enough to understand, but the letter A has at least two if not three different meanings as one goes through the provisions, which causes great confusion. As I have said, it would be better to use different letters.

Robert Syms: Theoretically, with a revaluation, there is a change in values. The multiplier is changed, but there is the same amount of money. I noticed in the chart that the Library made me after the last revaluation that the amount coming from business went up by £1 billion, more than one might have expected.
 When the calculation for the multiplier against the rateable value is made, what assumptions are made about a reduction in appeals? Does the multiplier reflect an assumption about that by setting the amount of money raised at a slightly higher level than would be necessary, so that when the appeals come along, there is the expected sum, but if the appeals are not won, there is more than was expected? Although the calculation is meant to be simple, some of the assumptions made in the calculation could determine whether business pays a larger chunk of the funds that sustain local government.

Valerie Davey: I, too, want to probe further. I am not convinced that the underestimating losses on appeals are as significant as the Government believe and I wonder whether the powers in the clause are necessary. Will the Minister estimate the losses over the past three or four years? How much has the Treasury lost as a result of losing appeals? Is the problem significant enough to justify the new power, with all the negative effects that the hon. Member for Cotswold outlined?

Christopher Leslie: I appreciate the lapse in time between the previous speaker and me: a few extra seconds can make all the difference. Rate poundage for England and Wales is calculated under rules set out in schedule 7 to the Local Government Finance Act 1988.

Phil Woolas: Will my hon. Friend give way?

Christopher Leslie: Of course.

Phil Woolas: If my hon. Friend can hold on for a few minutes we will be through.

Christopher Leslie: I appreciate that reassurance from my hon. Friend.
 I was rather tickled by the hon. Member for Cotswold when he asked why the same letters are used with different meanings. This is the answer that I now have to hand. A, B, C, D and E in clause 63 are being inserted into section 43 of the 1988 Act. A, B, C, D and E in clause 64 are inserted into schedule 7 to the 1988 Act. I hope that that answer helps the hon. Member for Cotswold. 
 Clause 64 provides for two multipliers in future in England. There will be a small business non-domestic rating multiplier, and a non-domestic rating multiplier. For any year in which a small business rate relief scheme is run under clause 63, the second multiplier, the non-domestic rating multiplier, will be 
 set at a higher level than the small business rating multiplier to produce an addition to rate yield equal to the rate yield lost through small business relief. The options for small business relief in Wales are still under consideration and I know that my hon. Friend the Under-Secretary of State for Wales will be happy to go further into that when we reach clause 65. 
 In addition to providing for the funding of small business relief in England, the clause also makes changes, for both England and Wales, to how the multipliers, including the English small business multiplier, are to be adjusted to take account of the effects of revaluations. Under the 1988 Act, all non-domestic properties are revalued every five years. The next revaluation will be on 1 April 2005. The purpose of revaluation is not to change the total yield from rates, but to redistribute the rate burden in line with movements in the property market since the last revaluation. If there is a significant increase in total rateable value at a revaluation, the multiplier must be reduced. Alternatively, if there is a significant decrease in total rateable value, the multiplier must be increased. Thus, in a revaluation year such as 2005, the calculation of the English and Welsh multipliers will include an adjustment to offset changes in the total rateable value for each country between 31 March 2005—the last day of the old rating lists—and 1 April, the first day of the new lists. 
 The hon. Member for Poole asked an important question about the effect of appeals. That point was also touched on by the hon. Member for Kingston and Surbiton. The value for the first day of the new lists is 
 subject to something known as ''erosion'' through successful appeals by ratepayers for reductions in their new rateable values having retrospective effect from 1 April. Therefore, the Secretary of State and the Welsh Assembly are currently required to estimate what will be shown for 1 April once the effect of successful appeals has been allowed for. The estimated final rateable values for 1 April are used when making the adjustment to the multipliers to offset the effect of revaluation. 
 The estimates are difficult to make. I do not know the precise amounts of loss on appeal for the year, although I understand that the assumptions we made in setting the multiplier, both in 2000 and 1995, estimated the losses for appeals at around 5 per cent. Those estimates subsequently proved to be relatively robust.

Valerie Davey: If the estimates were robust, why do the Government need the extra power?
Mr. Leslie rose—

Derek Conway: Had the Minister finished speaking?

Christopher Leslie: I must answer the question asked by the hon. Member for Kingston and Surbiton about whether those sums estimates were robust. We believe that they were. However, they were not entirely accurate, as they were estimates. I hope that that answers the hon. Gentleman's question.
 Debate adjourned.—[Mr. Woolas.] 
 Adjourned accordingly at two minutes past Five o'clock till Tuesday 11 February at five minutes to Nine o'clock.